By: Andrew Rosen, CFP®, CEP®

It would be nice if everyone spent responsibly and never ran into financial issues.

With almost 20 years experience, I can tell you this is far from the truth. Many struggle with handling their family’s expenses, and I’ve spent a good amount of time coaching people through this. Therefore, I figured for today’s blog, I’d give my 6-step guide on how I would address your spending.

Step 1: Identify there is a problem

Seems like an obvious first step, right? However many don’t understand they even have a problem. Sometimes this gets uncovered by the overwhelming credit card debt. Other times, it’s after a financial plan is run that shows my client working until age 90. Before you begin to solve the problem, you first must recognize there is a problem. Otherwise you won’t be motivated to fix it.

Step 2: Communication

Now that you’ve recognized the problem, the next step is to communicate it with your significant other. This communication is critical to fix the spending issues. It must be a joint venture, otherwise you’re liable to lose interest quickly. Think about any big obstacles you’ve faced as a married couple. Now, imagine getting passed it without the buy-in of your significant other. You want this person being an ally, not working against you on this initiative.

Step 3: Data Gathering

Time to roll up your sleeves and get dirty. You’ll have to find a way to capture the data. All I care about for this step is to get the data (adjustments happen later). Capture what you spend per month on each category–then total that to find your yearly expenditures. You may find it helpful to use a tool like to capture this data. Otherwise, you can usually look at your bills, credit card statements, and bank account statements to get an accurate depiction.

Step 4: Analysis

Now it is time to take the data and put in into categories. I would categorize them as follows:

1. Essentials- These are things you can’t live without. Think groceries, utility bills, clothing, car payment, mortgage, etc. You know these items (unless something is grossly out of the normal–like a $2,500/mo car payment) are here to stay.

2. Necessary Family Expenses- These are things you can technically live without. But let’s be real, you are going to pay $50 for your kid’s recreational soccer league or ballet. However, if Armageddon was here, it might have to get cut from the budget. Most people aren’t at this stage, but it is good to categorize them separately.

3. Lifestyle Keeps- Now you have to start compartmentalizing your pleasures. Cutting expenses mean inevitable lifestyle vices get cut. That said, I still want you to enjoy life. So, take a hard look at the data gathering and make sub-categories of things you’d like to keep in your lifestyle first. This may be family vacations or Eagles tickets. (Did somebody say Eagles? E-A-G-L-E-S… EAGLES!). Think best-bang-for-your-buck. There may be ways to do some of your passions more cost effectively, like golf at public courses vs. belonging to a private club.

4. Lifestyle Removal- I know this one hurts. You are down to those things you enjoy, but you know they’re out of your price range. This is where communication is key.  It might be less “gadgets” for your husband, or less “shoes” for your wife (this is the exact moment my wife stopped reading this blog, by the way). This will take some real work and self-reflection. It’s especially hard to get rid of an expense, instead of never having it to begin with. The harsh reality is you know there are luxuries that you must cut.

Step 5: Bring in the cavalry

You’ve first identified the problem. You’ve discussed it with the important people in your life. You’ve recorded your findings in a detailed manner. And, you’ve identified areas of fluff.  What’s left but to bring in the cavalry. This is where someone (like a good financial planner) can help you take a hard look and hold you accountable. Someone who can help get creative and think about how to attack these expenses. You’ll need someone to slap your wrists when you go astray. You can do it alone, but it will take incredible discipline— the kind of discipline you’ve lacked up into this point.

Step 6: Pour that glass of wine.

For me, it’d be a nice glass of California red. The point here is once you start seeing the fruits of your labor, reward yourself. You should be proud about progress, for its not easy. Know that you’ve secured your family’s finances for the better and that is something to smile about.

Financial planning and Investment advisory services offered through Diversified, LLC, a registered investment advisor. Securities offered through Securities Service Network, LLC, Member FINRASIPC.  Some associates of Diversified, LLC are registered representatives of Securities Service Network, LLC, a registered broker/dealer, 9729 Cogdill Road, Knoxville, TN 37932. (800) 264-5499.